ANIL KUMAR SETH, KARNAL V. DCIT, CENTRAL CIRCLE, KARNAL

ITA 3786/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2500 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 21-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SATPAL GULATI
• Keywords: Income from undisclosed sources; Search and seizure; Set aside
• Section: 153A; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI A BENCH: NEW DELHI (THROUGH VIDEO CONFERENCING ) BEFORE SHRI G.S.PANNU, PRESIDENT & SHRI KUL BHARAT, JUDICIAL MEMBER ITA NOS.3786 & 3787/DEL/2018 ASSESSMENT YEARS : 2009-10 & 2010-11 ANIL KUMAR SETH, C/O-VINOD KUMAR BINDAL & CO., CA, SHIV SHUSHIL BHAWAN, D-219, VIVEK VIHAR, PHASE-1, NEW DELHI-110095. PAN-APQPS4647J VS DCIT, CENTRAL CIRCLE, KARNAL. APPELLANT RESPONDENT APPELLANT BY SH.V.K.BINDAL, CA & MS. RINKI SHARMA RESPONDENT BY SH. SATPAL GULATI, CIT DR DATE OF HEARING 08.09.2021 DATE OF PRONOUNCEMENT 29 .10.2021 ORDER PER KUL BHARAT, JM : THESE TWO APPEALS FILED BY THE ASSESSEE FOR THE ASS ESSMENT YEARS 2009- 10 & 2010-11 ARE DIRECTED AGAINST THE ORDERS OF LEA RNED CIT(A)-2, GURGAON BOTH DATED 28.03.2018. SINCE THE IDENTICAL GROUNDS HAVE BEEN RAISED, BOTH THESE APPEALS ARE TAKEN UP TOGETHER AND ARE BEING DISPOSE D OFF BY WAY OF THE CONSOLIDATED ORDER. 2. FIRST WE TAKE UP ASSESSEES APPEAL IN ITA NO.3786/DEL/2018 PERTAINING TO ASSESSMENT YEAR 2009-10 . THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN THIS APPEAL:- 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE BEST JUDGMENT ASSESSMENT MADE U/S 144 OF THE ACT ALLEGIN G NON-COOPERATION OF ITA NOS.3786 & 3787/DEL/2018 ASSESSMENT YEARS : 2009-10 & 2010-11 PAGE | 2 THE ASSESSEE AND NON-FURNISHING OF THE DESIRED INFO RMATION; WHICH IS NOT CORRECT AS THE ASSESSEE DULY PARTICIPATED IN THE AS SESSMENT PROCEEDINGS AND ALSO FURNISHED ALL THE DESIRED DETAILS/ DOCUMEN TS SOUGHT BY THE DEPARTMENT. THUS, THE ASSESSMENT SO FRAMED MUST BE ANNULLED BEING BAD IN LAW. 2. THE LEARNED CIT(A) ALSO ERRED IN LAW AND ON FACT S BY NOT APPRECIATING THAT THERE WAS A MASSIVE JAT RESERVATI ON AGITATION IN THE STATE OF HARYANA IN THE MONTH OF FEBRUARY, 2016 WHE N THE ROAD/RAIL MOVEMENT WAS TOTALLY BLOCKED, WHICH RESULTED INTO N ON-APPEARANCE DURING THE SAID PERIOD THEN BEFORE THE ASSESSING AUTHORITY DUE TO REASONS BEYOND CONTROL OF THE APPELLANT. 3. THE CIT(A) WHILE DECIDING THE ABOVE ISSUE HAS RE LIED ON HER APPELLATE ORDER DATED 22/09/2017 AGAINST THE PENALT IES IMPOSED U/S 271 (1)(B) OF THE ACT WHICH ORDER IS NOT ONLY ILLEGAL B UT IS ALSO BASED ON FALSE AVERMENTS OF THE ASSESSING OFFICER AS WAS DEMONSTRA TED IN THE APPELLATE PROCEEDINGS. THUS NO RELIANCE CAN BE PLACED ON THE SAID APPELLATE ORDER ALREADY IN APPEAL BEFORE THE HON'BLE ITAT. 4. THE CIT(A) ERRED IN LAW AND ON FACTS IN NOT ADMI TTING THE LEGAL GROUND ON THE FACTS THAT THE ENTIRE SEARCH OPERATIO N IN THE PREMISES OF THE APPELLANT WAS A GOOF UP WITH UNKNOWN INTENTIONS AS IS CLEAR FROM THE PANCHNAMA AND OTHER MATERIAL ANNEXED THERETO. THERE FORE, NO RELIANCE CAN BE MADE ON THE SAID PROCEEDINGS AND THE STATEMENTS RECORDED THEN. THE ASSESSMENT ORDER PASSED IN CONSEQUENCE TO THE SEARC H WARRANTS IN THE CASE OF THE APPELLANT SHOULD BE DECLARED AS AN ILLE GAL SEARCH AND THE ASSESSMENTS FRAMED THEREAFTER SHOULD BE ANNULLED AS VOID AB INITIO. 5. THE CIT(A) ERRED IN LAW AND ON FACTS IN NOT ADMI TTING THE LEGAL GROUND ON THE FACTS THAT NO INCRIMINATING MATERIAL WAS SEIZED FROM ANY PREMISES INCLUDING OF THE ASSESSEE IN RESPECT OF AN Y UNDISCLOSED INCOME SO ASSESSED IN THE HANDS OF THE APPELLANT AND NO NOTIC E U/S 142(1)/148 OF THE ACT WAS ISSUED TO THE ASSESSEE TILL THE DATE OF SEARCH IN RESPECT OF THE ASSESSMENT YEARS UNDER CONSIDERATION. THUS, NO ASSE SSMENT WAS PENDING ITA NOS.3786 & 3787/DEL/2018 ASSESSMENT YEARS : 2009-10 & 2010-11 PAGE | 3 AS ON THE DATE OF SEARCH IN RESPECT OF THE RELEVANT ASSESSMENT YEAR AND NO SUCH INCOME CAN BE ASSESSED U/S 153A OF THE ACT WHI CH SHOULD BE DELETED. 6. THE CIT(A) ERRED IN LAW AND ON FACTS IN NOT ADMI TTING THE ADDITIONAL LEGAL GROUND ON THE FACTS THAT THE INFORMATION OF THE IMP UGNED RELIED MATERIAL BEING THE FREIGHTS PAID BY THE TWO COMPANIES REFERR ED TO IN THE ASSESSMENT ORDER TO MAKE THE ADDITIONS WAS ALREADY WITH THE RE VENUE IN THE FORM NO. 26AS FOR THE RELEVANT PREVIOUS YEARS AND I OR OTHER WISE THIS INFORMATION WAS GATHERED DURING THE COURSE OF SURVEYS IN THE PR EMISES OF SHRI VISHNU OVERSEAS (P) LTD. AND SHRI VISHNU EATABLES (INDIA) LTD. AND NOT DURING ANY SEARCH. THUS, THE SAID MATERIAL COULD NOT BE RELIED IN ANY MANNER TO MAKE AN ADDITION AS UNDISCLOSED INCOME U/S 153A OF THE A CT WHICH SHOULD BE REVERSED. 7. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING AN ESTIMATED ADDITION OF RS. 14,37,592/- BEING THE DIF FERENCE IN THE 10% OF GROSS RECEIPTS OF TRANSPORTATION CHARGES ON THE BAS IS OF 26AS OF THE APPELLANT AND OF THE AMOUNT DISCLOSED BY THE APPELL ANT HIMSELF IN HIS RETURN OF INCOME- (I) WHILE NOT APPRECIATING THE TRUE NATURE OF SERV ICES RENDERED BY THE APPELLANT, BUT MERELY ON WHIMS; (II) BY MERELY REJECTING THE SUBMISSIONS OF THE A PPELLANT; AND (III) EVEN WHEN NO INCRIMINATING MATERIAL WAS FOU ND IN THE SEARCH AND ASSESSMENT HAD NOT ABATED. THUS, THE ADDITION SO CONFIRMED MUST BE DELETED. 8. THE APPELLANT CRAVES THE LEAVE TO ADD, SUBSTITUT E, MODIFY, DELETE OR AMEND ALL OR ANY GROUND OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING. ITA NOS.3786 & 3787/DEL/2018 ASSESSMENT YEARS : 2009-10 & 2010-11 PAGE | 4 3. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT ONLY EFFECTIVE GROUND IS GROUND NO.7 WHERE THE LD.CIT(A) HAS CONFIRMED THE ESTIMATED ADDITION OF RS. 14,37,592/-. 4. FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT IT IS RECORDED BY THE ASSESSING OFFICER (AO) THAT A SEARCH AND SEIZURE OPERATION WAS CONDUCTED AT THE RESIDENTIAL AS WELL AS BUSINESS PREMISES OF M/S . SHRI VISHNU OVERSEAS PVT. LTD. AND M/S. SHRI VISHNU EATABLES INDIA LTD. GROUP OF CASES AND BANK LOCKER OF THE ASSESSEE ON 17.01.2014. THEREAFTER, THE ASS ESSEE FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION IN FORM ITR -4 ON 05.01.2016 DECLARING TOTAL INCOME OF RS.10,84,680/-. THE STA TUTORY NOTICE U/S 153A/143(2) OF THE INCOME TAX ACT, 1961 (THE ACT) WAS ISSUED. IN RESPONSE TO THE NOTICE, SH. NAVIN CHAUDHARY, CA & AUTHORIZED RE PRESENTATIVE OF THE ASSESSEE ALONGWITH ASSESSEE SH. ANIL KUMAR SETH ATT ENDED THE PROCEEDINGS, ONLY THREE TIMES DESPITE HAVING GIVEN SUFFICIENT OP PORTUNITIES. UNDER THESE FACTS, THE ASSESSING OFFICER PROCEEDED U/S 144 OF T HE ACT. IT WAS NOTICED BY THE AO THAT DURING THE SEARCH PROCEEDINGS OF M/S.VISHNU GROUP OF CASES, KAITHAL, THE ASSESSEE HAD RECEIVED TOTAL PAYMENT OF RS.5,58, 77,566/- UNDER THE HEAD FREIGHT CHARGES FROM M/S. SHRI VISHNU EATABLES IN DIA LTD. AND M/S. SHRI VISHNU OVERSEAS PVT.LTD. FOR THE ASSESSMENT YEAR U NDER CONSIDERATION, THE TOTAL PAYMENT RECEIVED FROM TWO ENTITIES WAS RECOR DED AT RS.3,03,30,227/-. THE AO AFTER CONSIDERING THE MATERIAL ON RECORD, CO MPUTED THE PROFIT @ 10% ON THE RECEIPT AND THUS MADE ADDITION OF RS.24,92,272/ -. ITA NOS.3786 & 3787/DEL/2018 ASSESSMENT YEARS : 2009-10 & 2010-11 PAGE | 5 5. AGGRIEVED AGAINST THIS, THE ASSESSEE PREFERRED A PPEAL BEFORE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS PARTLY ALLOWE D THE APPEAL. THEREBY, LD.CIT(A) REDUCED THE INCOME WHICH WAS ALREADY DECL ARED AMOUNTING TO RS.10,84,680/- AND SUSTAINED THE REST OF THE ADDITI ON, AFFIRMING THE ACTION OF AO. 6. NOW, THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBU NAL. 7. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT BEFO RE THE AUTHORITIES BELOW, IT WAS STATED BY THE ASSESSEE THAT THE IMPUGNED PAY MENT DID NOT PERTAIN TO THE ASSESSEE AS THE TRANSPORTERS WERE NOT HAVING PAN N OS. THEREFORE, PAN NO. OF THE ASSESSEE WAS UTILIZED FOR THIS PURPOSE. THE FA CTUM OF PAYMENT MADE TO THE TRANSPORTS WAS ALSO CONFIRMED BY THE RECIPIENTS OF THE SERVICES. LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT NO EFFECTIVE OP PORTUNITY WAS GIVEN BY THE AUTHORITIES BELOW. FURTHER, HE SUBMITTED THAT THE ASSESSEE HAD PROVIDED SUFFICIENT EVIDENCES TO SUPPORT HIS CLAIM. 8. ON THE CONTRARY, LD. CIT DR OPPOSED THESE SUBMIS SIONS AND TOOK US THROUGH THE IMPUGNED ORDERS. LD.CIT DR SUBMITTED T HAT IT IS CLEAR FROM THE RECORDS THAT THE ASSESSEE WAS GIVEN SUFFICIENT OPPO RTUNITIES BUT THE ASSESSEE COULD NOT GIVE THE SATISFACTORY EXPLANATION REGARDI NG PAYMENT MADE TO THE ASSESSEE BY THE RECIPIENT OF THE SERVICES. UNDER T HESE FACTS, THE AUTHORITIES BELOW WERE JUSTIFIED IN MAKING ADDITION IN THE HAND S OF THE ASSESSEE. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORDS. THE CONTENTION OF THE ASSESSEE IS THAT THE AUTHORITIES BELOW HELD ITA NOS.3786 & 3787/DEL/2018 ASSESSMENT YEARS : 2009-10 & 2010-11 PAGE | 6 ASSESSEE LIABLE FOR TAX PURELY ON THE BASIS THAT HI S PAN WAS UTILIZED BY THE RECIPIENT OF SERVICES FOR DEDUCTION OF TAX. IT IS THE CONTENTION OF THE ASSESSEE THAT HE HAD NOTHING TO DO WITH THE IMPUGNED TRANSAC TIONS. IN FACT, HE HAD ONLY FACILITATED THE TRANSACTION BY ALLOWING TRANSPORTER S TO UTILIZE HIS PAN. IT IS FURTHER CONTENTED THAT THE AO DID NOT TREAT THE TRA NSACTION AS BOGUS, HE HAD TREATED IT AS BUSINESS TRANSACTION AND COMPUTED PRO FIT ON IT AT THE RATE OF 10%. SO FAR QUESTION REGARDING NATURE OF RECEIPT IS CONC ERNED, THERE IS NO DISPUTE, THE ASSESSING OFFICER HAS TREATED IT BEING A BUSINE SS RECEIPT. THE BONE OF CONTENTION BETWEEN THE REVENUE AND THE ASSESSEE, IS THAT AS PER THE ASSESSEE THE PAYMENTS WERE NOT MADE TO HIM, IN FACT THE IMPU GNED RECEIPT BELONGED TO THE TRANSPORTERS. 10. IT IS ALSO SUBMITTED WHATEVER THE ASSESSEE EARN ED COMMISSION, HE HAD DULY DISCLOSED IN HIS RETURN OF INCOME. WE FIND TH AT THE AO HAS RECORDED THAT THE ASSESSEE COULD NOT PRODUCE THE TRANSPORTERS WHO SE TRUCKS WERE HIRED BY THE COMPANY/IES. IN THE PRESENT CASE, THE ASSESSIN G OFFICER MADE THE IMPUGNED ASSESSMENT U/S 144 OF THE ACT. IT IS INCUM BENT UPON THE AO WHEN HE PROCEEDS U/S 144 OF THE ACT, HE IS REQUIRED TO M AKE BEST JUDGEMENT ON SOME PLAUSIBLE GROUNDS. IN THIS CASE, THE ASSESSING OFF ICER ISSUED A SHOW CAUSE NOTICE DATED 21.03.2016 CALLING UPON THE ASSESSEE A S TO WHY THE PAYMENT AMOUNTING TO RS.5,58,77,566/- RECEIVED UNDER THE HE AD FREIGHT CHARGES FROM M/S. SHRI VISHNU EATABLES (INDIA) LTD. AND M/S . SHRI VISHNU OVERSEAS PVT.LTD. MAY NOT BE TREATED INCOME FROM UNDISCLOSED SOURCES AND ADDED IN HIS INCOME. HOWEVER, INSTEAD OF TREATING THE ENTIRE RE CEIPTS AS BOGUS, THE ASSESSING OFFICER PROCEEDED TO COMPUTE PROFIT ON IT @ 10% OF GROSS RECEIPT. IT IS ITA NOS.3786 & 3787/DEL/2018 ASSESSMENT YEARS : 2009-10 & 2010-11 PAGE | 7 NOTEWORTHY THAT THE ASSESSING OFFICER DID NOT RECOR D ANY REASONING AS TO WHY HE WAS ADOPTING 10% OF GROSS RECEIPT AS PROFIT. IN THE ABSENCE OF THE REASONING, THE REQUIREMENT OF PROVISIONS OF SECTION 144 OF THE ACT, ARE NOT SATISFIED. HENCE, THE ACTION OF THE ASSESSING OFFI CER CANNOT BE SUSTAINED, SAME IS HEREBY SET ASIDE. THE ASSESSING OFFICER IS, THE REFORE, DIRECTED TO DELETE THE ADDITION. THE GROUND OF APPEAL NO.7 RAISED BY THE ASSESSEE IS ALLOWED AND OTHER GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. 12. NOW, WE TAKE UP ITA NO.3787/DEL/2018 PERTAINING TO ASSESSMENT YEAR 2010-11. 13. THE FACTS AND GROUNDS ARE IDENTICAL AS WERE IN ITA NO.3786/DEL/2018 PERTAINING TO ASSESSMENT YEAR 2009-10. THE LD. REP RESENTATIVES OF THE PARTIES HAVE ADOPTED THE SAME ARGUMENTS AS WERE IN ITA NO.3 786/DEL/2018 [ASSESSMENT YEAR 2009-10]. FOR THE SAME REASONING, GROUND OF APPEAL NO.7 RAISED BY THE ASSESSEE IS ALLOWED AND OTHER GROUNDS ARE DISMISSED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. 15. IN THE FINAL RESULT, BOTH APPEALS OF THE ASSESS EE ARE PARTLY ALLOWED. ABOVE DECISION WAS PRONOUNCED ON CONCLUSION OF VIR TUAL HEARING IN THE PRESENCE OF BOTH THE PARTIES ON 29 TH OCTOBER, 2021. SD/- SD/- (G.S.PANNU) (KUL BHARAT ) PRESIDENT JUDICIAL MEM BER ITA NOS.3786 & 3787/DEL/2018 ASSESSMENT YEARS : 2009-10 & 2010-11 PAGE | 8 * AMIT KUMAR * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI